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Coronavirus legacy: Ho Chi Minh City’s food and beverage sector undergoes major overhaul



As the effects of COVID-19 drag into 2021, the majority of food and beverage businesses in Vietnam have to tread water, resorting to personnel lay-offs, downscaling or business remodeling in the hope of reaching a ‘new normal’ era.

Those who survived 2020 are picking up steam this year thanks to a drop in property rental costs, among other factors.

Located in Ho Chi Minh City’s Tan Binh District, Thien Hong Phat, a seafood restaurant, has managed to pull through so far by laying off 70 percent of its workforce.

According to Nguyen Hoang Minh, chief operating officer at Thien Hong Phat, the lay-off reduced salary expenditure by 20-30 percent, while productivity remained unchanged.

“The management chose to reschedule shifts and allot the salary budget to the remaining staffers, helping them earn more with the workload they’ve taken up,” Minh explained.

On top of that, the restaurant also rolled out various sales campaigns, including an up-to-20 percent discount on products, new all-inclusive dinner packages, as well as catering services.

The solutions paid off, as Thien Hong Phat started to record a net profit, while current customer footfall recovered to 70-80 percent of the pre-virus figure.

Echoing Thien Hong Phat’s story, the restaurant chain Lau Ga 109 (Chicken Hotpot 109) has closed down six out of its 16 branches in Ho Chi Minh City.

Tran Quoc Thinh, owner of the chain, said one of the closed locations had only operated for two months, which wasted property rent and investment and led to a VND5 billion ($218,000) loss.

To keep the other restaurants afloat, Thinh strived to streamline all unnecessary overhead costs, remapping the customer territory of each location in the franchise, and set new opening hours.

“Thanks to the remodeling, we managed to cut the loss from the peak of VND1.2 billion [$52,334] per month to VND100-200 million [$4,361-8,723],” Thinh revealed.

For others, COVID-19 is considered an opportunity for change.

Hong, owner of a restaurant franchise specializing in the noodle dish mi quang in Binh Thanh District, Ho Chi Minh City, switched his business model to small, scalable branches with a focus on takeaway demand after the coronavirus drove a large part of his restaurants out of business.

“The revenue [of the chain] was down 50 percent, but cost was down too, which is why we still reported a decent profit,” Hong said.

Elastic demand for rental

Hoang Thanh Huong, a restaurateur in Ho Chi Minh City, just terminated a restaurant rental contract in Go Vap District due to unfavorable terms offered by the landlord in the recent renegotiation.

“Our business was down 70 percent from the pre-coronavirus days already, yet they tried to raise the rental by almost two-fold,” Huong complained.

“It’s as if they’re trying to drive us away.”

During the hard times, other firms have also grown to be more sensitive to rent fluctuations.

Quynh, owner of the seafood eatery Happy, moved her restaurant after securing a long-term lease with reasonable pricing, leaving behind the old place whose proprietor did not agree to lower the rent.

“Despite losing some old customers and having to chip in hundreds of millions of dong [VND100 million = $4,361] for redesign, it’s still worth it for a long-run venture,” Quynh denoted.

Finance pundit Dinh The Hien told Tuoi Tre (Youth) newspaper that proprietors tend to hike the rent at the start of a new year, for demand for leases also emerges during this time.

However, as the post-pandemic scenario has rendered many properties vacant, raising rent during this season is not a wise choice, Hien advised.

“As businesses are struggling, especially in downtown districts where food and beverage facilities were hit the hardest, proprietors would not be able to find new renters right away after terminating contracts.”

Pinning hopes

Regarding the shrinking of his chain, Lau Ga 109 owner Thinh sees it as an interim solution that helps a medium-sized firm like his deal with the epidemic’s sweeping knock-on effect.

In the long run, he has already had in mind an expansion plan, with as many as 50 branches to be up and running by 2022 and beyond, by distributing his franchise rights to other restaurateurs.

“We are still keeping our fixed overhead for the ten remaining restaurants at around VND1.2 billion per month, which will help us survive four or five more months until a breakthrough opportunity comes,” Thinh anticipated.

Also keeping up high hopes, Nguyen Thi Thao, owner of the snakehead fish noodle soup restaurant franchise Ba Thao, is looking to open more branches despite seeing a 40 percent drop in customer footfall.

As Thao sees it, opening more small-sized offshoots would be the optimal choice to promote her brand and build her customer base, as well as cutting costs.

“As long as [the brand] lives, I have hope,” Thao declared.

Ha Binh Kha, owner of the restaurant chain Hai Chau, is also leveraging the post-pandemic scenario for his brand’s growth, as he just opened more branches thanks to favorable rental contracts.

“Our rentals dropped by 30 percent compared to the pre-COVID days, with contracts going up to five years,” Kha stated.

“Many restaurants were out of business, but it also means customer demand will be distributed to the survivors.

“As long as we keep up the good management and utilize online sales, we won’t have to worry about any lack of customers.”

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Despite growing demand in Ho Chi Minh City, supply of affordable apartments flatlines



Ho Chi Minh City has seen a nominal number of new affordable housing projects in the past five years, which has greatly frustrated the road to homeownership of the city’s up-and-coming young workforce.

As per Vietnamese law, social housing is put under strict regulations, where hopeful buyers must meet a score of criteria to become eligible for purchase.

Members of the general public are resting their best hopes on privately-developed affordable housing projects, yet the category is finding itself in a tight corner of the market, catching little interest from developers.

Fizzling supply

After the housing bust that haunted the domestic market from 2009 to 2013, Ho Chi Minh City and the surrounding locales observed a surge of housing projects from low- to mid-tier range, as 78 percent of the new housing projects in the area in 2017 were classified as B- or C-tier, according to a report from the real estate firm DKRA.

As per Vietnam’s Circular 31/2016, qualified apartment buildings are ranked in three tiers, with A signifies the highest standard, B the midpoint, and C the lowest possible, often associated with affordable housing projects.

However, in their report on the Ho Chi Minh City housing market in the third quarter of 2018, DKRA pointed out that supply of new C-tier apartments shrank to two percent.

By 2020, these numbers had almost gone to zero, while new high-priced units had dominated the market with 69 percent, the consulting firm said.

Meanwhile, the cost for the supposedly affordable housing units is rising over the typical workers’ heads, with the rate for an average C-tier unit going from VND16 million (US$700) per square meter to more than double that figure last year, which means a 15-20 percent increase per annum.

In the first three months of 2021, high- and mid-priced apartments were still seen taking over the market, while supply of affordable units remained scarce.

Buyers on a budget in Ho Chi Minh City are having a hard time finding listings at the price below VND35 million ($1,516) per square meter, as apartments in neighboring Binh Duong and Dong Nai Provinces have already soared to VND33-45 million ($1,429-1,949) per square meter.

A recent research of the Ho Chi Minh City Real Estate Association also confirmed the dominance of high-end housing projects, which covered 70 percent of the market, while mid-tier developments accounted for 25 percent.

Meanwhile, affordable housing only makes up one percent, or 163 projects, out of all housing projects in Ho Chi Minh City and surrounding areas that called for investments in 2020.

This proves an indication of the imbalanced development of the local real estate sector, which bodes a dubious future of unsustainability.

A house of 36 square meters wide that accommodates 10 people in Ho Chi Minh City. Photo: Quang Dinh / Tuoi Tre

An apartment of 36 square meters in area accommodates 10 people in Ho Chi Minh City. Photo: Quang Dinh / Tuoi Tre

The great hunt for homes

For the time being, the interest rate for private home loans, with no favorable conditions applied, floats at 10-11 percent per year.

At this rate, a loan of VND1 billion ($43,332) over a 10-year term would require VND200 million ($8,664) in compound interest per year.

In case of a future hike in interest rates, the total interest to be paid in 10 years could easily equate, even surpassing the initial loan amount.

Duc Minh, a father in Tan Phu District of Ho Chi Minh City, said a loan like above would require the combined income of his and his wife’s to reach at least VND30 million ($1,308) per month, as he still has to pay for food, schooling bills for his children, as well as saving for unexpected events.

“This is why we’ve been on the fence [about taking out the loan,] while the housing price is still skyrocketing,’ he said.

According to Minh, an apartment of 60 square meters in the outlying districts of Ho Chi Minh City would cost at least VND2 billion ($86,664), which is totally out of his financial capacity at this moment.

Khoi, a resident of Thu Duc City under Ho Chi Minh City, said he is scrambling to find an apartment in suburban districts with his budget of VND1.5 billion ($65,000).

“I feel like entering an unfair race between homebuyers and the market price. The rate always rises two or three times faster than I can save,” he stated.

Khoi attributed the phenomenon to the swing investors, who cram sales opening events of housing projects to buy and pump the price up, which will drive people with actual demands to find a place to leave the game.

Construction site of an apartment building project in Thu Duc City under Ho Chi Minh City. Photo: Quang Dinh / Tuoi Tre

The construction site of an apartment building project in Thu Duc City under Ho Chi Minh City. Photo: Quang Dinh / Tuoi Tre

Manufactured hype

Last year’s skyrocketing cost of housing in Ho Chi Minh City can be accredited to developers’ choice to create supply scarcity, as well as a high demand for housing as investment property, which took up as much as 70-80 percent of units in new apartment projects.

On top of that, accompanying fees for land and legal procedures have pushed up real estate prices in the southern city, said Su Ngoc Khuong, senior director of investment at the real estate firm Savills.

Over the past three years, a real estate upswing in the southern metropolis has been recorded every year after the Lunar New Year holiday, which usually takes place in late January or early February.

“It’s just manufactured hype, as realistic transactions are very low,” said Pham Lam, deputy president of the Vietnam Association of Realtors.

“Real estate brokers are complaining as they have been facing struggles to sell for months.”

Regarding the recent real estate fevers, Lam pointed out that they all stem from insider reports of new master plans for development, which could drive prices of local land through the roof.

However, these information sources are usually manipulated by a powerful few, who seek to profit from the market mania on which they have the upper hand.

Lam also pointed out growth in idle money among Ho Chi Minh City citizens, as well as high hopes among speculators for the real estate market in a period of economic recovery, as reasons for the housing boom.

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Saigon witnesses rising demand for luxury goods ‘spas’



Although it might sound exciting to work with designer goods, the craftsmen who restore and repair luxury items face a difficult balance.

Designer bags, shoes, and backpacks are customers’ means of showing their social status in Vietnam.

However, how can these assets which might cost hundreds of millions, even billions of Vietnamese dong be repaired as they get older?

“I have a deep passion for handbags, even mangled ones,” said Pham Ngoc Hieu, founder of Auth Spa in Ho Chi Minh City’s Phu Nhuan District, about the motivation behind his luxurious bag ‘spa.’

The handbag savior

Hieu started trading high-end bags ten years ago after quitting his previous desk job.

He realized that no matter how well-made they were, sooner or later, handbags would be damaged.

Meanwhile, it was hard to find a person able to repair them.

Handbag touching up, at the time, was still a strange service in Vietnam.

Hieu went abroad to learn techniques of handbag restoration before opening his own spa, becoming the pioneer in the country.

He and his partners offer cleaning and repair services on premium handbags, shoes, and accessories made by world-renowned luxury goods manufacturers including Hermes, Gucci, Chanel, Dior, Louis Vuitton or Burberry, which are stained, scratched or deformed. 

Nguyen Thi Thanh Truc, Hieu’s wife, is a professional in restoring products’ original colors and changing leather hues.

“Bags which are severely stained or discolored need restoring with electromagnetic shielding paint and setting spray,” said Truc.

“For changing an original color into another, it depends on which shade it is.

“The success rate for basic colors is about 90 percent while for limited ones it’s only 80 percent.”

Their first account was to restore a handbag valued at VND70 million (US$3,000).

“I was scared at first because the bag was too expensive,” she recalled.

“Not clear about its leather’s characteristics, I tinted it wrongly.

“It took me a week to realize that for absorbing leathers, I needed to use a lighter shade of colors.”

Nguyen Thi Thanh Truc painstakingly repairs a luxurious Hermes bag. – Photo: Le Phan/Tuoi Tre

Nguyen Thi Thanh Truc painstakingly repairs a luxurious Hermes bag. Photo: Le Phan / Tuoi Tre

Upper-class services

Most valuable products repaired by Auth Spa are from Hermes, ranging from thousands to dozens of thousands of U.S. dollars for each item.

“We have processed dozens of Hermes handbags under VND500 million [$21,600],” said Truc.

“Their owners take good care of them as they are too expensive.

“Most of the orders are to restore straps and decolored parts, which required both meticulousness and skills.

“Otherwise, we would have to pay considerable compensation.”

According to her, fixers learn by doing. Through time, she has gained a lot of experience and created her own techniques of repairing handbags.

“Once we love the products and treat them as our own, we will be confident and give the best shot to take care of them,” Truc shared her philosophy.

In 2015, Hieu and Truc opened their first bricks-and-mortar workshop and got flooded with orders from Ho Chi Minh City and other localities.

Upper-class customers are the targets of ICUS – a luxury goods spa by Tran Huy Hoang, 29, in Ho Chi Minh City.

“A person who pays VND20 million [$867] for an item can definitely afford the repairing fee of VND3-4 million [$130-173]. It makes no sense to restore a bag that costs some VND500,000 [$21] at the same expenses,” Hoang said, adding the cost would be determined based on a bag’s damage levels and customer orders.

A bag valued at VND40 million ($1,700), for example, will be restored to be like-new at VND7 million ($303). The harder it is to be fixed, the higher the cost will pile up.

“I think for valuable, premium goods, the restoring expense of some million dong is not too high,” he added.

“We used to ‘revive’ a heavily damaged Gucci bag valued at VND140 million [$6,000] at several million dong. It might have been resold at VND50 million [$2,160] at least,” he added.

Some 10 percent of his frequent customers are celebrities.

“They are picky and strict when it comes to leather finishes and deadlines,” he told Tuoi Tre (Youth) newspaper. 

“However, as authorized accessories need importing from abroad, late appointment is unavoidable.”

A staff of ICUS tints a Coach bag to fix discolored parts. – Photo: Le Phan/Tuoi Tre

A staff of ICUS tints a Coach bag to fix discolored parts. Photo: Le Phan / Tuoi Tre

A risky job

There are many invisible risks posed to people working in the industry, according to Hoang, since they have to deal with high-value products on a daily basis.

He recalled the compensation of VND20 million for a VND26 million ($1,126) Burberry bag for accidentally staining it when cleaning.

“The bag was constructed by different materials so staining and decoloring some parts were inevitable. The chance of making mistakes is about two to three of every 3,000 orders,” said Hoang.

Another risk is to deliver wrong items. He said a couple days ago, his staff carelessly put a VND30 million ($1,300) Chanel wallet into a wrong package for delivery.

“Luckily, my customer called saying she received a wallet that was not hers and asked us to take it back,” he said.

The most dangerous situation, according to Hoang, is to lose customers’ goods because it is not only about compensation but also trust issues. He has a budget to handle incidents.

“God blesses us, we barely need to use it,” he said.

To prevent any fault, craftsmen have to be able to shoulder pressure and pay attention to details. The reward is high earnings.

“They are all painstakingly selected and trained to both clean and repair handbags,” said Hoang.

“Staff in charge of tinting and restoring have to be arts and architecture students.

“We have our own team of delivery workers.

“Customers can review final products before deciding to receive or send them back to our workshop for further fixes.”

Although it has just been introduced for six months, ICUS has developed its list of frequent customers.

“I will soon launch laundry services for handbags, shoes, and backpacks. The market still has room to grow,” he shared his vision.

Besides two branches in Thu Duc City’s Thao Dien Ward and Ho Chi Minh City’s District 10, Hoang said he planned to open two other shops in District 3 and Phu Nhuan District.

Both Auth Spa and ICUS help their customers to distinguish real luxury goods from fake ones using their experience. The demand has risen since a lot of people are able to afford premium products but they cannot tell the difference between authentic products and counterfeits.

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From humble sedge come new creations



By Thúy Hằng

Despite being born and bred in Nga Sơn, a rural district in the central province of Thanh Hóa famed for its traditional bed mats and other products made of sedge, Trần Doãn Hùng never wanted to follow the craft and becoming involved in a business endeavour relating to the material never even crossed his mind.

HANDS ON: Trần Doãn Hùng weaving sedge bags at Cỏ May Craft’s workshop. Photos courtesy of Trần Doãn Hùng

Like many in his village, after graduating from high school he headed to Hà Nội to attend university and then worked for a few years in the capital.

In 2017, he went to work at a resort in the beach city of Nha Trang on Việt Nam’s south-central coast, where by chance he found a new direction in life. A female co-worker showed Hùng her new handbag, made of sedge. Admiring its meticulous weaving, he began to think about his hometown’s famed craft.

“I wondered whether this was something I could do,” the now 28-year-old recalled. “After some restless nights, I decided to quit my job and return home and found a start-up.”

And so it was that in 2018 Hùng founded Cỏ May Craft (Gold Bear Grass Craft).

“Gold Bear grass, the local sedge, is flimsy but durable,” he said in explaining the company name.

“Like many people who were born and bred in a village, when I was living in the city I was always nostalgic for home, with its green pastures and sedge. It’s what brought me back.”

Without knowledge and experience, though, he had to start out from scratch. While studying and learning the craft, he was fortunate enough to meet a helpful craftsman in the central city of Huế who was willing to share his skills and experience.

He also decided, though, to focus on sedge products other than mats, which had been made in his home village for hundreds of years.

BEST SELLERS: About 1,000 bags from Cỏ May are sold each month on Amazon in the US.

Cỏ May, therefore, specialises in producing women’s handbags. Together with sedge, the company also makes bags using other natural materials such as rattan, bamboo, straw, and hyacinth.

“Customers only accepted our products once they met their requirements in quality and design,” he said. “This why I pay particular attention to such details.”

His bags are rounded out by leather straps, handles or flaps, which add a modern touch. They also come with a removable inner lining, so they can easily be kept clean.

WELL-MADE: One of Cỏ May’s sedge tote bags.

For the young and demanding entrepreneur, product quality isn’t just about durability but also about style and elegance.

“Quality must be seen in every detail,” he said. “The product must look nice, but this doesn’t mean you don’t have to care about every single knot and seam.

CARE & ATTENTION: Every detail is important, according to Hùng.

“Keeping an eye on such details requires that craftsmen be experienced in observation and be self-disciplined.”

Fruitful endeavour

Though any number of enterprises have been seriously hit by COVID-19, Cỏ May has come through it all largely unscathed.

“Sales have only been down slightly, as we mostly sell via online platforms,” he said.

QUALITY IS KEY: Hùng casts his eye over one of his bags at a shop in HCM City.

The 1,000 bags produced each month are sold on Amazon in the US at prices ranging from US$75 to $150.

Hùng’s products have also found favour in France and Australia, with substantial monthly orders coming from traders.

COVID-19 did, however, give the young businessman a new idea.

“People weren’t able to go out during the pandemic, and instead spent more time at home,” he explained. “So the thought occurred to me: Why we don’t create decorative household items from sedge?”

WALL TO WALL: Cỏ May has been selling wall hangings on Amazon since February.

Cỏ May Craft then started to introduce decorative wall hangings made of sedge on Amazon in February and feedback so far has been positive.

Last year a project of Hùng’s called “Combining natural materials and leather to create handbags” won first prize at a contest on start-up ideas from young people organised by the Thanh Hóa provincial Youth Union.

To create stable jobs for his fellow villagers, Hùng has begun a training course for a group of women aged 35-55.

“Once they become skilled weavers of our particular products, instead of employing people from elsewhere, such as Kim Sơn in Ninh Bình or others from Huế, we can recruit local villagers,” he said.

He feels happy whenever he receives a photo of customers with one of his sedge bags.

“That’s when I realise my products have travelled all over the world,” he said. “I feel proud to have contributed to promoting ‘Made in Việt Nam’ arts and crafts to international customers.”

His ambition continues, with plans to cooperate with Vietnamese fashion brands as well as foreign retailers in creating a new range of items. VNS


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